Accounting could be a crucial element in a company’s operation. When their business activity rises and systems need to alter, several expanding organizations find it challenging to develop well-tuned accounting processes. Strong accounting procedures enable you to base your decisions on current information and improve them.
You must verify the comprehension and application of the following foundational concepts in order to assess the success of your outsourced accounting service provider.
Income and Expense Itemization
The first stage in maintaining proper accounting is to accurately record all of the incoming and outgoing cash, both in terms of amount and account. A company can maintain a clear and accurate accounting record in this way. Using programs like Expensify and Shoeboxed, it is easy to track costs without maintaining hundreds of receipts in the modern world thanks to technology.
Get a bank reconciliation statement from your accountant and go over it item by item, at least for the first few months, to ensure that all of the income, expenses, and related receipts and payments have been recorded. This can help you determine whether or not your service provider is knowledgeable about the fundamentals.
Selecting a Bookkeeping Technique
Cash or accrual bookkeeping is the two options. The cash approach is the easiest since it records revenue as soon as cash is received and expenses as soon as it is spent. However, it does not provide a comprehensive view of a company’s operations. Contrarily, in the accrual method, revenue is recognized when it is earned rather than when it is received and costs are incurred even if they have not yet been paid. This approach gives a clearer view of how a business operates. To determine which approach is best for your company, it is advised that you speak with your accountant.
The ideal accounting program
Making the right software choice to keep track of your earnings and expenses is quite important. The most well-known programs are QuickBooks and MyCorporateBooks, but there are many others like Xero or FreshBooks. Each solution has benefits and drawbacks, so you must weigh your options carefully. Request an assessment of the current software from your accounting service provider and/or a recommendation for new software that will benefit your company, along with justifications.
Finding The Correct Gateway
You must employ a trustworthy, effective, and lawful way to collect your money. PayPal, Stripe, and Square are a few well-known and widely used names in the electronic payment collection industry. Using a check scanner that your bank will give, you can make real-time deposits. You can send and receive money via the Intuit exchange with certain products, such as QuickBooks.
Understanding Your Tax Liabilities
Every business is required to pay a variety of taxes. The taxes that apply to a business depend on its legal form and whether it is charged sales tax or VAT. The sole tax that is currently in effect in the UAE is the Value Added Tax. It is essential to map company transactions with the correct tax codes, and this process must be done carefully because any compliance issues could result in difficulties and, most likely, fines.
Review the records you filed your VAT returns against the actual returns in your FTA account. This will enable you to determine whether or not your accountants are correctly closing the books.
Reviewing and assessing accounting controls on a regular basis
Any business’s foundation is its internal controls. To prevent fraud and errors, internal controls must be established and continually reviewed in both small and large organizations. Request an independent audit of the procedures and safeguards your service provider has put in place for your company. Every size of business should strongly consider conducting an annual internal audit to give you the opportunity to check your organization’s control environment. Internal auditors will not only point out any flaws in the procedures and controls put in place by your accounting service provider, but they will also make recommendations on how to fix such flaws.